1. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)
Number of Hedge Fund Holders: 156
In a recent episode of Mad Money, Cramer was a big proponent of Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) as he explained why the semiconductor giant is important in today’s landscape.
“… If you didn’t listen to Taiwan Semi’s conference call last night, you missed out on a performance that explains so much of what’s going on in this market, in the world.
I’m talking about the off-the-charts demand for chips that enable artificial intelligence. Those are almost all manufactured by Taiwan Semi, which is the crucial cog in the semiconductor machine. That’s how you know this move is for real.
This company is the biggest and the best. Last night was a tour de force show, especially for one customer, Nvidia. They might as well have entitled the conference call in praise of Nvidia because Nvidia is crushing it in partnership with this amazing Taiwanese company. I talk about Nvidia a great deal, but I don’t say much about Taiwan Semi, which is wrong. See, like most American semiconductor companies, Nvidia is actually more of a designer. Taiwan Semi is the company that builds the product.. You can’t have Nvidia without Taiwan Semi.”
Cramer discussed the company’s focus on AI-related operations and its position in the AI industry, saying:
“How close are they? Let me quote from Doctor C. C. Wei, he’s a PhD and chairman and CEO of Taiwan Semi ‘So one of my key customers said the demand right now is insane.’ Well, the key customer is Nvidia. And like Nvidia’s redoubtable, implacable CEO Jensen Huang, Wei says that the demand for AI chips ‘is real, and I believe it is just the beginning of the demand.’
Bingo. There it is. Unlike ASML, the semiconductor equipment maker that gave you a sob story about the whole industry the other night, with the exception of AI, Taiwan Semi’s focused on the cutting edge of the industry. That’s what they are. They know it because they use it. As Wei said, ‘We have our real experience. We have been using AI and machine learning in our fab and R&D operations. By using AI, we are able to create more value by driving greater productivity, efficiency, speed, qualities.’
He goes on to explain that Taiwan Semi’s customers would say the same thing. What a contrast to the lame ASML call that caused so many people to sell Nvidia. Panic, panic, and once again revved up the chip obituary machine.”
Taiwan Semiconductor (NYSE:TSM) is engaged in the production, packaging, testing, and distribution of integrated circuits and various semiconductor components. As a key player in the industry, it is responsible for the majority of the global supply of advanced high-end semiconductors, which are essential for powering many artificial intelligence applications.
The company announced third-quarter results on October 17 and reported revenue of 759.7 billion New Taiwan dollars (1 New Taiwan Dollar = $0.031), a significant increase of 39% compared to the same period the previous year. The company also experienced a noteworthy rise in earnings per share, which climbed to NT$12.54, which is a 54% year-over-year improvement. According to CFO Wendell Huang, these strong results are because of heightened demand in both smartphone and AI-related markets.
Among Taiwan Semiconductor’s (NYSE:TSM) revenue streams was its high-performance computing segment, which includes chips utilized in AI technologies. It experienced a remarkable growth of 51% year-over-year. The surge highlights the increasing reliance on advanced computing capabilities to support AI innovations. Additionally, the recovery in smartphone sales contributed to the company’s overall performance, with revenue from this sector increasing by 34%.
While we acknowledge the potential of Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than TSM but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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